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Enterprise Marketing Management
The New Science of Marketing
By Dave Sutton and Tom Klein John Wiley & Sons, Inc.
Copyright © 2003 Dave Sutton and Tom Klein
All right reserved. ISBN: 0-471-26772-4
Chapter One
MARKETING IS NOT AN ART-IT
Marketing is all about creativity, right? Mining idea space for inspiration that will connect with customers? Seeking that perfect message that will resonate so deeply with customers that they'll rush right out and buy your product?
Guess again. As Sergio Zyman pointed out in his first book, The End of Marketing As We Know It? (Harper Business, 1999) marketing is a science, not an art. And if you spend your time thinking of marketing as nothing but a creatively based endeavor, you're going to have a lot of ideas-but not a lot of customers.
This isn't the science of your old chemistry lab in high school. Many marketers chose marketing precisely because it involves interaction with some of the most creative people in our society-copywriters, advertising creatives, graphic artists. Marketers do tend to have an eye for how things should look, an ear for language, a deep and penetrating understanding, and zest for their cultural metaphor. There's absolutely nothing wrong with that.
However, every yin deserves a yang. The marketer's role simply can't consist of fawning or mindless meddling in the creative enterprise du jour. First and foremost, a marketer is a businessperson. It's indeed the responsibility of the marketer to bring a healthy portion of intellectual and process discipline to these investments in what are often creative exercises. It's this discipline that is at the heart of enterprise marketing management (EMM) and the new science of marketing.
To begin, a quick review of some of the terminology of science, starting with the dictionary definition:
sci·ence n.
1. The observation, identification, description, experimental investigation, and theoretical explanation of phenomena.
a. Such activities restricted to a class of natural phenomena.
b. Such activities applied to an object of inquiry or study.
2. Methodological activity, discipline, or study: He's got mowing the lawn down to a science.
3. An activity that appears to require study and method: the science of purchasing.
4. Knowledge, especially that gained through experience.
Now, the real-world definition: science refers to the way we explain the world around us, whether it's what's happening right now, what's happened up to this point, or what will happen if we take (or fail to take) certain actions. Centuries ago, science explained that the earth revolves around the sun, and not vice versa-correctly, accurately, and in the face of prevailing belief.
It's this facet of science-the ability to peer beyond the everyday, to ask questions and keep asking-that applies to marketing. What theories do you use to explain why things are the way they are? Why isn't your company selling more, more profitably, and more rapidly turning out new products? Why can't you get your stock price any higher? The theories-or, perhaps, rationalizations-that answer these questions constitute your understanding of your market and the actions of your business within that market.
Chances are, you already possess a significant degree of scientific knowledge about your current business, and you may even have a few theories of your own. The trouble is, too many theories are like old wives' tales-stories repeated so often, and with such conviction, that they take on the aura (and influence) of fact. Your company might have numerous theories about why things are the way they are, but few companies have taken the steps necessary to validate these theories. The need for validation will come into play later in this book, focusing on the use of your own customers (or target customers) to develop the value proposition for your brand. The question you need to answer is: How do you determine what benefits actually drive your customers to buy?
Start with a hypothesis about what you hope and expect to achieve with your marketing. For marketers, the usual hypothesis runs along these lines: Will this campaign/activity/initiative help us sell more? Within that overall framework are dozens of smaller, more focused questions, including these:
~ How do I increase share without cutting prices?
~ How do I get products to market faster?
~ How do I beat a competitor that's 10 times my size?
~ How do I close deals faster?
~ How do I reposition my brands against my competition?
~ How do I develop new products that win?
~ How do I segment my markets to sell more?
~ How do I differentiate what I sell when I'm in a commodity market?
Each one of these questions leads up to the big one: Does this action actually help me sell more of what I have to more customers at higher margins? Before you get to that point, however, you have to prove a number of hypotheses along the way, which will help you gain a greater understanding of your market. In other words, the better your overall understanding of your market, the more likely you are to sell more with your marketing programs.
Think back to your elementary school science classes, and you'll remember a technique called the scientific method, a means to prove or disprove hypotheses by following these steps:
1. Observe some aspect of the universe.
2. Invent a theory that is consistent with what you have observed.
3. Use the theory to make predictions.
4. Test those predictions by experiments or further observations.
5. Modify the theory in the light of your results.
6. Return to step 3, and continue as needed.
Easy enough ... if you're testing, say, the boiling point of water. But how does this relate to marketing? Consider the opportunities that open up when applying the scientific method to a tangible marketing possibility:
1. Observe some aspect of the universe-that is, your market. For example: The average age of the population is increasing.
2. Invent a theory that is consistent with what you have observed. The average age of my buyer is increasing.
3. Use the theory to make predictions. Older buyers are more health oriented and would respond to marketing programs and products that address health concerns.
4. Test those predictions by experiments-in this case, marketing programs-or further observations. Launch health-oriented products and marketing programs.
5. Modify the theory in the light of your results. Get results and learn!
6. Go to step 3, and repeat until you've mastered this ability to repeat successful experiments to achieve your desired results.
Are you addressing issues this way? Are you applying the scientific method to your marketing?
Everyone applies this method at a certain level, even if it's as simple as determining another way to get to work when the traffic's heavy. But marketers traditionally must figure out how the scientific method applies to their work while suffering with one hand tied behind their back. And sometimes they've done poorly with the hand they have left to them.
Marketing tends to function in an information vacuum-or an information disconnect. Think of it like gambling. When the dotcoms spent millions on Super Bowl advertising-the corporate equivalent of living in a trailer and gambling one's life savings-is that really a better investment than placing all that money on red and spinning the roulette wheel?
Gambling away dollars like this means your marketing isn't based on any particular aspect of the market. Gambling away dollars doesn't proceed logically from a measured observation of the universe around you. And reverse-engineering science to fit the results doesn't excuse the haphazard strategy of shotgun-style marketing.
If you're not applying the scientific method, what you're really doing is just gambling, nothing more. This isn't to say you won't hit a few winners along the way-chances are that you'll come up aces once in a while. But the odds are always against you: Play long enough, and you'll be flat out of chips.
PUTTING SCIENCE IN PLAY
So science explains what's happening (in your markets, with your customers), and the scientific method provides an approach to help you understand how to expand your knowledge and increase your control of what's happening. You're a marketer with products and services to sell. Your market represents your specific field of expertise, your historical business results, and information represents the science of your company-that is, everything you've learned to date-and your day-to-day efforts involve constant experimentation to learn more. With all this in your corner, you've got the opportunity to use this collective knowledge to develop and implement winning strategies.
Marketers have had decades of opportunity to do business this way, but a few speed bumps have cropped up along the way:
~ A lack of timely, relevant customer insights to define a brand's value proposition and drive brand decision making and investments
~ An inability to translate this value proposition into specific actions, both in traditional media and company-wide, to build an end-to-end brand experience with targeted customers
~ A lack of integration and accountability in action on relevant customer insights across key enterprise constituencies such as marketing, sales, service, manufacturing, finance, human resources (HR), information technology (IT), and so forth, to increase the profitability of the business
This kind of fancy marketing-speak tends to make most people's eyes glaze over-even those of experts in the field-but it delineates a fairly logical process. Marketers don't need fancy degrees, milewide skill sets, or reams of experience to succeed. All that's required is a simple focus on the best way to get your goods in the hands of your customers-and their money in yours. Think of it this way. Marketers often fail in three key categories: those with (1) the inability to use their knowledge of their customers to position their brands; (2) the inability to put their brands to work beyond traditional media; and (3) the inability to build necessary customer-facing processes with supporting organization, culture, and information for brand management.
RUN BRANDS AS BUSINESSES, NOT AS CAMPAIGNS
Each one of these stumbling blocks requires further examination, and succeeding chapters will explain more about how to address them. First you must recognize that your brands aren't these things that sit over in a corner and get talked about only by your marketers. Your brands are your business. If your company is guilty of any of the following:
~ Thinking of a brand as a cute logo, a spiffy tag line, or maybe a whiz-bang package
~ Going overboard and creating a new brand name for everything, but not having anywhere near enough money to actually make the brand name meaningful in the minds of your customers
~ Continuing to organize and track the business (How much did we sell? How much did we invest?) only on basic product categories or, even worse, by person (Bill's P&L, Joan's P&L) instead of by brands (brand-specific P&Ls)
Then you have plenty of work to do.
The first step on the road to enterprise marketing management is to think of and run your brands as businesses. Brands are much more than marketing campaigns, advertisements and logos. Don't give them any less respect than you would reserve for your divisions or departments of today. If you don't bring a brand-centric approach to the way you think about and manage your business, you will never get beyond square one.
Once you've decided to run your brands as businesses, the most basic problem that you will face is that your company probably has not learned how to use knowledge of its customers to position its brands. Certainly, there are shelves full of books on the subject, but this idea of positioning brands for some reason remains elusive for many companies. If you need to know the specific nuts and bolts of how to position brands to drive sales and profits, keep reading. Companies seem almost defiant in their preference to stick with their current guesswork instead of developing a deep understanding of the benefits that will really drive their customers to buy. In other words, the communication of what specific benefits has a causal relationship with more sales? Can you answer this for your brands? These benefits should be organized into a brand architecture that clearly fleshes out the value the company creates and the key emotional and functional benefits it must communicate consistently to sell more products and services.
In many instances, through no fault of their own, companies just don't know what marketing is supposed to do or be. Because real marketers are rare ducks who flock together in companies that spend big bucks on advertising, most companies do not even have true marketers running the show. Scratch the surface of most marketers at nearly any large company, and you'll often find refitted salespeople, trained in a completely different discipline. There's absolutely nothing wrong with being a great salesperson or a great engineer or a great information technologist. There is something wrong with pretending that there's no real science to marketing. You wouldn't expect your top salesperson to instantly know how to manage the logistics for your warehouses. Nevertheless, companies continue to put untrained marketers in positions where they're supposed to know something about how to put brands to work to drive sales and profits higher. It's no wonder marketing is in such a fragmented state. Part of bringing a more scientific approach to marketing is making sure you have real scientists running the laboratory-but that's a topic for later.
This inability to leverage customer insights extends beyond using customer knowledge to create a compelling brand architecture. Enterprise marketing management has also been inhibited from taking hold by the fact that marketing in general has remained separate from the information flow of the rest of the company. The information revolution has absolutely transformed the way business is done around the world. However, in most cases, marketing has experienced this revolution from the sidelines. That's not exactly a revelation, but the fact that marketing still hasn't made use of all available technology means the revolution's not yet over.
Nearly every company has pulled together all its information into easily accessible, accurate, integrated databases, so that nearly any person in the company can view information about transactions, customers, and products, all in real time. It's this uniform view of information across a company that's new.
Continues...
Excerpted from Enterprise Marketing Management by Dave Sutton and Tom Klein Copyright © 2003 by Dave Sutton and Tom Klein. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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